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Paying Commission in Holiday Pay

#HRFridayFact: Holiday pay must include an amount for commission that an employee would have earned had he or she not taken holiday leave

It’s official. In the case of Lock vs British Gas, the Employment Appeals Tribunal (EAT) has this week ruled that commission payments must be made to employees on holiday for whom commission makes up part of their regular remuneration.

The Lock vs British Gas case has rumbled on for a few years now. Commission is usually paid to sales staff, as in this case, and can make up a large part of an employees’ pay. The Lock vs British gas case is based on the premise that taking time off on holiday is dis-incentivised because the opportunity to earn commission is removed.

The ruling follows on from the case of Bear Scotland vs Fulton last year which determined that non-guaranteed overtime should be included in holiday pay calculations. The new ruling means that commission needs to be paid in the holiday of commission earning employees.

The decision will affect thousands of other pending holiday cases forcing employers to review their current holiday pay polices in relation to elements such as overtime and commission.

However we don’t think the commission ruling is going to be as straightforward as the overtime decision to implement.

Firstly, commission is usually paid in arrears; so earnings for sales made in January will be paid in February. This means that whilst on holiday, the employee will very likely be paid the commission they earned the previous month. So the real issue here is that time taken on holiday should attract commission.

Secondly, its’ likely that there will be an agreed reference period over which to calculate average commission. However this period has yet to be clarified. Will it take seasonal differences into account? Car sales increase at certain times of year and holiday the peak for holiday sales is January.

With an agreed calculation remaining indeterminable, it may come down to tribunals to decide on a cases by case basis. This means cases in dispute may become time consuming for employers creating upset and turmoil.

Until further clarification is made, which may take a further tribunal case or two, we recommend that employers do not duck the issue. If you employ commission earners, make some clear proposals and hold an open discussion to get them agreed by your staff.

You will at least then be able to prove you have taken positive steps and settled on an arrangement that everyone has agreed upon.

If you require any further support with this or any other HR and Employment Law related issue then please give us a call on 01452 331331.

26 February 2016, 13:40

Keeping in Touch During Maternity Leave

#hrfridayfact: By mutual agreement employees can opt to work up to 10 keeping in touch days during their maternity or adoption leave

Employees on maternity, adoption or additional paternity leave are allowed to work for up to 10 days, referred to as “Keeping in Touch” (KIT) days, without bringing their leave or pay to an end. Those on shared parental leave can work for up to 20 “Shared Parental in Touch” (SPLIT) days without ending their leave or pay.

An employee cannot insist upon working KIT/SPLIT days, nor are they obliged to work them if the employer asks; they must be mutually agreed. The hours worked and the rate of pay must also be agreed as any payment will need to take into account statutory maternity, adoption or shared parental leave pay.

Statutory pay is usually offset against contractual pay so the employee does not earn both. There are no regulations which state what the rate of pay should be but the employee’s usual rate of pay is normally expected.

A KIT/SPLIT day counts if it is a whole day or just part of a day. So attending a meeting for just an hour or two will come off the allowable maximum as a whole day.

Employers may be reticent to encourage KIT/SPLIT days as an additional cost is likely, particularly if somebody else has been employed temporarily to cover the maternity or shared parental leave. However there are a number of reasons why they might be a good idea. For example:

  • Training – Particularly in regulated industries, new legislation or procedures may need to be imparted to employees and it may be better to do this on a KIT/SPLIT day rather than catching up when the employee returns to work
  • Assisting with project work – The employee may have a specialist skill that needs to be called upon for a project or piece of work however planning and timing may be crucial here
  • Changes to the business – Keeping those absent on maternity or shared parental leave abreast of changes in personnel or organisational changes will aid a smoother more efficient return to the workplace when the time comes
  • Meetings – Depending on the employee’s role or position they may still need to influence decisions in the business or with clients
  • Return to work preparation – Working part-time on the run up to the employees full-time return may be a good way to use KIT/SPLIT days

KIT/SPLIT days can be worked at any time during ordinary or additional maternity, adoption or shared parental leave with the exception of the compulsory two weeks maternity leave immediately following birth.

Finally, if the employee refuses to work KIT/SPLIT days, they should not be treated differently or unfairly.

Maternity leave is a complicated subject, surrounded by discriminatory potential. If you need any help or support with employees on maternity, adoption or shared parental leave you can call us on 01452 331331 or e-mail info@hrchampions.co.uk

19 February 2016, 15:04

Paying SSP

#HRFridayFact: Unless your policy differs, employees on sick leave who qualify are only entitled to £88.45 Statutory Sick Pay per week

Statutory Sick Pay, or SSP is paid only to employees who qualify for it and only at the rate of £88.45 unless you have a policy that enhances this amount and you pay more. This has become less likely however since the Government changed the rules a few years ago which means that employers are no longer able to claim back the SSP that they pay.

To qualify for SSP, an individual must be classed as an employee, ie have an employment contract, and have done some work for the employer. They must also earn an average gross pay at least at the lower Earnings Limit (LEL) for National Insurance, currently £112 per week; so lots of part time workers will qualify too. The average pay is calculated over the previous 8 weeks.

Before SSP commences, the employee must have been ill for 4 consecutive days, referred to as a Period of Incapacity for Work (PIW). These can include non-working days; so weekends or days that part-timers or shift workers are not at work. However, SSP is only paid for the days that the employee would normally be at work, known as qualifying days. And it is not paid for the first three qualifying days that the employee is absent.

As an example, an employee usually works Monday to Friday. He becomes ill on Saturday which is when his PIW commences. His qualifying days do not commence until Monday and because the first three days of absence are not paid, he only receives SSP for Thursday and Friday of that week.

If two periods of illness fall within eight weeks of one another they are classed as ‘linked’. The advantage to the employee is that there is no waiting period for linked absences so he or she will receive SSP from day one of the second period of absence.

The disadvantage of linked periods of sickness absence is that they are combined when calculating the maximum amount of SSP that can be claimed, which is for a period of 28 weeks. After this time, there is no obligation on the employer to pay SSP.

Apart from the maximum claim period, there are other instances to where employees are ineligible to claim SSP including when the employee is on Maternity leave, when Statutory Maternity Pay would be payable instead.

Calculating SSP and an employee’s eligibility for it can be quite complicated so why not just call us for advice if you have an issue on 0452 331331.

We would also class anyone who has been absent on sick leave for four weeks or more as being on long term sick leave and for these employees we recommend have some kind of structured plan to deal with the situation. You can call us about this too, or e-mail info@hrchampions.co.uk

12 February 2016, 13:16

Settlement Agreements

#HRFridayFact: A settlement agreement can preclude employees from making tribunal claims about any incident or event listed on the agreement

A settlement agreement is designed to be a quick fix arrangement between an employer and an employee, or former employee, to settle a workplace dispute. A key point of a settlement agreement is that the employee forgoes the option to make a tribunal claim regarding the incident that has given rise to the settlement being made.

Although settlement agreements usually conclude an individual’s employment within a company, they don’t have to. A settlement agreement could be used to settle a dispute over an employee’s holiday perhaps, or an in-work benefit.

A settlement agreement can be a good way to circumvent what might otherwise be a drawn out disciplinary or performance management process. However we don’t recommend that they should be seen as an alternative to either and should only be considered under certain circumstances.

Settlement agreements are not a substitute for good working practices; nor are they the default position for when management fails.

Consider that a monetary settlement will be involved that the employer must be prepared to negotiate and pay, and that coming to one settlement may open the floodgates of other employees expecting the same. There is also the danger that an employer will get a reputation for simply ‘paying off’ problematic employees

A 'without prejudice' conversation relating to a settlement agreement can be started at any time by either an employer or an employee, but it must be done properly so as not to influence or prejudice any future events or decisions. Discussions should include payment arrangements, how the employment will be terminated (if this is an outcome) and any terms of an employer reference.

Once an agreement has been reached it must be put in writing and the employee given adequate time to consider it; usually ten days. The employee should also be advised to seek independent legal advice to have the terms of the settlement clearly and unambiguously explained to them. The cost of this advice should be met by the employer.

Once concluded, the employee has effectively given up any option to claim for unfair dismissal, provided this is detailed in the settlement agreement, so make sure that all loose ends are tied up. Also remember that some dismissals are automatically classed as unfair if they relate to an employee exercising specific rights relating to pregnancy or whistleblowing for example.

For further advice and support with settlement agreements please call us on 01452 331331 or e-mail info@hrchampions.co.uk

05 February 2016, 14:23

Grounds for Discrimination

#hrfridayfact: Discrimination Grounds=Age, Disability, Gender reassignment, Marital status, Race, Belief, Maternity, Sex, Sexual orientation

The grounds for discrimination claims are set out in the Equalities Act 2010 and are referred to as “Protected Characteristics”. We recommend that all employers are aware of what the protected characteristics are as they will always be considered by a Tribunal in cases of dismissal.

Awards against claims for discrimination are unlimited with the highest UK award standing at a staggering £4.5 million. It’s understandable then that when we are discussing an employee dismissal with a client, we invariably ask if there are discriminatory factors to consider.

Discrimination can also occur during the recruitment process so an individual doesn’t even have to be an employee to make a discrimination claim. This is why it is vital to have a fair and transparent recruitment process.

Here’s a brief synopsis of each of the Protected Characteristics:

  • Age – You can’t make decisions about employees that is influenced by their age, whether they are young or old. Asking someone to retire for example is a big no

  • Disability – Employers must make reasonable adjustments to the workplace in order to accommodate employees with a disability. There are limits of course but you must be able to prove that you have gone to reasonable lengths

  • Gender Reassignment – Staff who have undergone gender re-assignment must not be treated differently and they must have equal treatment and facilities. This may for example, include installing a female toilet in a previously all-male environment

  • Marital Status – Whether a person is married, single or divorced should not influence any decisions made about their employment status or terms

  • Race – This includes race defined by colour and nationality. Current thinking on this suggests omitting job applicants’ names from application forms so that race or nationality cannot be guessed and to stop employers making subliminal judgements

  • Religion or Belief – Similar to race; a person’s religion or belief should have no bearing on how they are treated or decisions made about them. Having no religion, ie Atheism, counts too

  • Pregnancy & Maternity – Treating someone differently because they are pregnant or on maternity leave is another big no

  • Sex – Whether an employee is male or female should make no difference. Sex discrimination is often cited in equal pay cases

  • Sexual Orientation – Relates to whether a person’s sexual attraction is to the same sex, the opposite sex or both sexes. In other words, Straight, Gay, Lesbian or Bi-Sexual.

To avoid discrimination cases, always make sure that you follow a clear and consistent process that is equal across the entire workforce, particularly where dismissal is concerned. However even those who resign voluntarily may still come back with a constructive dismissal claim if they feel they have been discriminated against.

If you think you may have a case that could give rise to a discrimination claim, why not give us a call for some advice on 01452 331331 or e-mail info@hrchampions.co.uk

22 January 2016, 15:49

Paying for Future Holidays

#HRFridayFact: An employee who leaves during your holiday year must still be paid for accrued bank holidays falling after their leaving date

If your holiday year runs from January 1st to December 31st and an employee leaves in, say, April, depending on how much holiday they have taken to date, you may find that you’re paying them to take future bank holidays off when calculating their final pay.

Holiday calculations come up time and again on our employer help line, and it can be a confusing subject with many different variables. Contract of Employment wording often plays a large part and what the contract says is often the first question we ask. There are a few rules to remember however when calculating holiday and holiday pay.

All UK employees are entitled to a minimum of 20 days paid holiday per year plus bank holidays, which is usually eight and must also be paid. So this equates to 28 days or 5.6 weeks total holiday; or a pro-rata amount for part time workers.

Employees in the care, retail and leisure industries are usually contracted to work on bank holidays so whilst their contract wording may differ, they are still entitled to 28 days holiday or an appropriate proportion if they are part time.

Therefore, if an employee ceases working for you at any point in time, you must calculate their final pay to include any holidays they have accrued but not taken, and this includes all annual leave AND Bank Holidays.

Here’s an example based on bank holidays for 2016...

Company X runs their holiday year from January 1st to 31st December. Employee Joe Bloggs receives his 20 days holiday plus eight bank holidays. Joe leaves the company on 29th February having taken no holiday except New Year’s Day which is a bank holiday. Joe’s holiday entitlement will be 4.6 days so he will have to be paid for 3.6 days holiday as he has already had a day off.
Part of this holiday pay will be for bank holidays that haven’t happened yet, such as Easter.

It is confusing, we admit, and may even appear a little unfair. A good rule of thumb is to calculate employees’ annual leave to include and treat bank holidays as any normal holiday.

Remember too that holiday pay calculations work both ways so pay can be deducted for holidays that have been taken but not accrued.

As usual, call us for further advice on 01452 331331 or e-mail info@hrchampions.co.uk

22 January 2016, 14:00

Reading Employees' Private Emails

#HRFridayfact: To enforce the right to read employee’s personal email & messages a company policy must be in place that staff are aware of.

To justify reading an employee’s personal email or online messages, the employer must have a policy in place relating to private use of company facilities and resources, which it believes the employee is in breach of.

The European Court of Human Rights judged this week that there is justification for employers to read their employees’ private online messages after it upheld the dismissal of a Romanian man for using his company Yahoo Messenger account to chat with family members.

The Romanian company’s own regulations stated that it was strictly forbidden to use computers, photocopiers, telephones and fax machines for personal purposes. Therefore, in order to monitor usage by its employees, the company could easily warrant checking the content of emails and messages to ascertain their purpose. The employee in question was sacked for breaching the company’s policy by sending personal messages on the company’s account.

A number of bodies, including the Institute of Directors (IOD) and the Chartered Institute of Personal & Development (CIPD) were quick to comment on the case and remark that employees don’t respond or perform well to being snooped on by their bosses. This is understandable of course, however we think it’s fair that employers should expect their staff to be engaged in company businesses during the hours for which they are paid.

Furthermore, anyone who attended our Cyber Security seminar in December will appreciate the implications and potential issues of a poorly enforced Internet usage policy.

Accessing inappropriate websites and information via a company computer might be an obvious breach of policy, but what if access is gained via a personal tablet or mobile phone using the company’s Wi-Fi? Any questionable Internet activity could be traced back to the organisation’s IP address thereby bringing the company into disrepute and/or leave it wide open for a cyber-attack.

We’ve commented before about the importance of implementing a robust social media and/or Internet usage policy within an organisation. Employees must be aware of your policy and have access to it however, or it won’t be enforceable

One course of action might be to prohibit accessing the Internet with a personal device via the company’s infrastructure, however this may make you unpopular with staff who like to catch up with their online contacts during their lunch break for example. If you do decide to allow access via your organisation’s Internet connection, we would recommend that your policy retains the right to access employees’ private email and messages; and that random checks will be carried out.

The pace of change of technology and the digital world means that it is equally vital to ensure that any policies are kept up to date to reflect current trends and usage. Applications such as Snapchat and Whatsapp add a new dimension to Internet usage and organisations need to ensure that they are not left exposed simply because their policy isn’t up to date.

For support with any of the issues raised here please call us on 01452 331331 or e-mail us at info@hrchampions.co.uk

15 January 2016, 14:41

Why you need an Adverse Weather Policy

#HRFridayFact: If your business is closed due to adverse weather but your staff make themselves available for work, you must still pay them

Where a business is unable to open owing to adverse weather, but employees still make themselves available for work, then they should still be paid as they are fulfilling, or attempting to fulfil, their duties under their contract of employment.

If your business remains open during adverse weather, it is not uncommon for employees who are unable to get into work to expect to be able to take the forced time off as paid holiday or unpaid leave; some may even make the assumption that they are entitled to receive full pay.

We would expect the decision on pay during such circumstances to remain discretionary on the part of the employer, and we strongly recommend that all employers have a robust Adverse Weather Policy in place to help enforce this. The policy should clearly lay out how the organisation will act in cases of adverse weather and how it expects its employees to behave. It should pay particular attention to how the employees’ pay will be affected.

Having just experienced the warmest and wettest Decembers on record, and in recent years the wettest summer, it’s only right that we should expect further adverse weather events in the future. Let’s face it, in the UK we are particularly poor at dealing with heavy snowfall and we may still have that to come.

Having an Adverse Weather Policy in place which is properly implemented amongst staff is a cheap and effective solution that will leave everybody in an organisation clear about what to do and what to expect work-wise when an adverse weather event occurs.

Different types of business will have policies that cover different issues that the weather presents. When travel has become impossible, a clause for opting to work from home or from another location might be appropriate. It is also a good option to continue trading even when the business premises is unable to open.

For other businesses, where adverse weather makes it too dangerous for employees to be working, roof-workers in icy conditions for example, a “lay-off” clause might be an appropriate solution.

In all cases, you should have your Adverse Weather Policy in place in plenty of time and ensure your workers are aware of it so that everyone knows what to expect. We can’t do anything about the weather that Mother Nature throws at us but as businesses we can be prepared to manage what we do about it.

If you would like further help or advice regarding the issues raised here or anything else related to HR and Employment Law, just call us on 01452 331331 or drop us an e-mail to info@hrchampions.co.uk

08 January 2016, 14:24

If Christmas was a Business

#HRFridayFact: Only working 1 day per year makes Santa’s Reindeer prime candidates for a Zero Hours Contract

If Santa actually ran Christmas as a business he would probably face a number of challenges that we regularly give advice about. For example, with his reindeer only working one day per year and for uncertain hours, he may want to consider employing them on a zero hours contract.

On a zero hours contract, Santa would only be obliged to offer the reindeer the hours that he had work available for; so he wouldn’t need to pay them to be idly stood around chomping hay. The reindeer would also be free to accept any other work that was offered to them by a different employer during the rest of the year; something that a normal contract might preclude.

The downside however is that there is no mutuality of obligation in a zero hours contract so the reindeer would not be obliged to accept the hours that they were offered. Santa would have to hope that his positions were attractive enough to tempt the reindeer either because of the prestige of being one of Santa’s reindeer or because he offered an attractive remuneration package.

The Elves present a different challenge. For most of the year Santa would probably have a team of elves making toys to meet anticipated demand. As Christmas nears he will need to make an assessment of how many children have been good, and whether an increase in production is required leading to a potential increase in the number of elves employed.

Options here would be to either take on extra elves via an elf agency, employ extra elves on a temporary/fixed term contract or to contract (s)elf-employed elves. Santa may prefer the authority that employer status gives him but he should remember that employees have access to full benefits from day one such as sick pay.

Agency elves have access to certain benefits immediately, such as access to parking, the staff canteen or crèche facilities and will gain rights to full benefits after 12 weeks in the same role. If Santa opts to engage self-employed elves on a contracted basis, whilst there are no employee rights to worry about, he still needs to be conscious of Health & Safety, HMRC issues and discrimination.

Also, Santa can dictate when his employees take their holiday, so he is within his rights to order all employees to take their holidays together or within a certain time frame such as in the summer when there will be little impact on toy production.

Finally, Santa may wish to consider the effect that the National Living Wage will be when it comes into force on the 1st April next year. The increase to £7.20 for over 25 year olds may have quite an impact on his wage bill which may lead to an increase in toy prices and may also result in some redundancies being made.

Please have a Merry Christmas and a Happy New Year, and if you need any help or support with the issues raised here please contact us on 01452 331331 or e-mail info@hrchampios.co.uk

17 December 2015, 16:59

It's Christmas Party Time

#hrfridayfact: When organised by the business, your works Christmas party is an extension of work, so the same rules & standards apply

Even if it is off site and outside normal hours, your work’s Christmas Party is deemed as an extension of work so make sure your staff understand this and that behaviour that is unacceptable in the workplace, such as sexist or racist remarks, will be treated with equal gravity if it occurs at the party.

It’s right to reward your employees for their hard work throughout the year and Christmas is an obvious time to do this. It makes sense to take advantage of the festive atmosphere and a party or event can also work as a team building exercise.

However employers must continue to take their responsibilities seriously, particularly when your employees are together in an out-of-work environment and alcohol plays a part. The Equalities Act and Corporate Manslaughter feature more prevalently these days as areas for concern and employers can suffer severe consequences for failing in their duty of care towards employees.

Here are some other pointers for you to think about:

  • Be sympathetic to cultural and religious tolerances at your event. If you offer complimentary wine for example, make sure you offer a complimentary non-alcoholic alternative for those whose religion discourages alcohol.
  • Similarly, if you’re providing food, consider what is agreeable to different religions and to those who require a vegetarian option.
  • A free bar may be viewed as a green light for binge drinking. Remember that your staff’s welfare is your responsibility so think about providing food and perhaps a disco to help control the over-zealous. If you employ young people, bear legal drinking ages in mind.
  • If alcohol is available issue advice about not drinking and driving in advance and if appropriate consider providing transport.
  • A mid-week event may be cheaper but think about staff getting into work the next day, potentially still under the influence of alcohol. If you employ drivers you may need to plan your event so they are not required to drive whilst unfit to do so.
  • If you’re hanging decorations, consider any Health & Safety implications, particularly fire risks. Christmas lights that are locked away for most of the year are likely to have missed out on PAT testing.

Despite these considerations, remember to enjoy yourselves and have a good time; which will be easier to do if your party runs incident free.

For support with implementing anything mentioned here, or for help dealing with the aftermath of your Christmas Party, please call us on 01452 331331 or e-mail info@hrchampions.co.uk

11 December 2015, 13:50